- 17 -
than the activity, particularly if the activity's losses
generated substantial tax benefits, may indicate that the
activity is not engaged in for profit. This is especially true
where there are personal or recreational elements involved. Id.
Petitioners concede that their other business activities
were successful and that this factor does not weigh in their
favor. The income of petitioners was substantial and was
sufficient to enable them to maintain a comfortable standard of
living notwithstanding the losses from the dog-breeding activity.
In addition, petitioners were able to receive a substantial tax
benefit from the deduction of these losses. Therefore, the fact
that petitioners had substantial income from outside sources,
showing the lack of need to make a profit from the activity,
supports a finding that petitioners did not carry on their dog-
breeding activity for profit. Golanty v. Commissioner, supra at
428-429.
9. Elements of Personal Pleasure
The final factor is the personal pleasure derived by
petitioners in conducting their activity. Sec. 1.183-2(b)(9),
Income Tax Regs. Although the mere fact that a taxpayer derives
personal pleasure from a particular activity does not mean that
he or she lacks a profit intent with respect thereto, the
presence of personal motives may indicate that the activity is
not engaged in for profit. This is especially true when there
are recreational elements involved. Id.
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